High Demand and Lesser Supply for Vietnamese Cassava and Its Derivatives Led Export Price to Increase

Cassava Starch

Published Sep 22, 2023

Vietnamese cassava has emerged as a significant player in the global market. From January to July this year, Vietnam's cassava exports amounted to 1.7 million metric tons, valued at USD 660 million. This marked a substantial 12% YoY surge in volume and a 19% YoY increase, with China standing out as the primary export destination. The rise in international demand for cassava can be attributed to the Russia-Ukraine conflict, which led to higher energy costs and prompted countries to turn towards cleaner energy sources, including ethanol produced from cassava. However, Vietnam encountered inventory challenges due to a scarcity of old-crop cassava and limited availability of new-crop stock. This scarcity, coupled with higher global demand, led to Vietnam's cassava starch exports in Jul-23 increasing by 3% month-on-month (MoM) to USD 476/mt. While facing stiff competition in the Chinese market, Vietnam had the potential to secure and expand its market share by focusing on improving product quality and leveraging its geographical advantages.

Cassava, Vietnam's third most cultivated agricultural crop after rice and maize (corn), has emerged as a key player in the international market. With over 530,000 hectares (ha) of cassava crops, the industry is experiencing significant growth, especially cassava starch.

From January to July this year, Vietnam exported 1.7 million metric tons (mmt) of cassava and its derivative products, reaching USD 660 million, up 12% year-on-year (YoY) in volume and 19% YoY in value over the same period in 2022. China is the largest export market, with 1.34 mmt reaching USD 522 million. This accounted for an impressive 78% of the total volume and 79% of the total value of Vietnam's cassava exports during this period. Cassava starch is one of the cassava derivatives in the Chinese market that experienced a surge in demand over the previous year.

Source: General Department of Vietnam Customs (GDVC)

The rising international demand for cassava was partly fueled by higher energy costs due to the Russia-Ukraine conflict. Many countries increasingly turned to clean energy sources, including ethanol, where cassava was a crucial raw material. As a result, the global market for cassava was poised for sustained growth.

Despite the positive export trends, Vietnam faced significant inventory challenges. There was a scarcity of old-crop cassava, and the stock of new-crop cassava remained limited. Many local cassava starch and cassava chip factories were compelled to halt production due to the high cassava prices and a shortage compared to the previous year. This scarcity was exacerbated by the presence of the cassava mosaic virus, which significantly reduced yields. Tây Ninh Province, one of the key producing cassava regions in Vietnam, was the first to detect this virus in Q1-23. It inflicted heavy damage on approximately 22,212 ha of cassava, primarily from the marketing year (MY) 2022/23 winter-spring crop. Approximately 60% of the cassava production area in Tây Ninh was impacted by the cassava mosaic virus.

The supply scarcity, coupled with higher international demand, contributed to high prices for Vietnam's cassava starch exports. The average export price of cassava starch to China has shown an upward trend since Mar-23. The export price in Jul-23 increased by 3% month-on-month (MoM) to USD 476 per metric ton (mt), primarily due to the daily delivery supply shortage.

Source: The Vietnamese Import-Export Department

In the highly competitive Chinese market, Vietnamese cassava and cassava starch faced stiff competition from Thailand, Laos, and Cambodia. The short-term outlook appeared challenging, with Vietnamese cassava farmers competing with their Thai counterparts. Nonetheless, Vietnam has the potential to secure and expand its market share in China by focusing on quality improvement and leveraging its geographical advantages.